by Paul Davidson, USA TODAY

by Paul Davidson, USA TODAY

The Federal Reserve is likely to keep the economy on a full dose of stimulus after this week's meeting but begin dialing it down by next month, say most economists surveyed by USA TODAY.

That would mark the Fed's first significant step in winding down the extraordinary easy-money programs it has put in place since the 2008 financial crisis and Great Recession, and signify that the economy should soon be strong enough to stand on its own.

The drama over whether the Fed will announce the tapering after a two-day meeting that concludes Wednesday has intensified recently, following a flurry of better-than-expected economic developments.

Just a handful of the 34 economists surveyed Dec. 12-13 predict the Fed this week will agree to pare its $85 billion in monthly bond purchases, but a slight majority say the tapering will begin by January. The purchases have held down interest rates and buoyed stocks, and trimming them is expected to gradually push up borrowing costs for consumers and businesses.

Yet that may do little to slow an accelerating economy. Monthly job growth has averaged about 200,000 the past four months, despite the federal government shutdown, and the unemployment rate fell to 7% last month from 7.4% in July.

Meanwhile, the Commerce Department this month estimated that the economy grew at a solid 3.6% annual rate in the third quarter, and consumer spending in the current quarter has exceeded forecasts.

This week, the House of Representatives passed a two-year budget deal that now awaits Senate action. If passed, it would remove much of the uncertainty about federal tax and spending policy that has clouded the economy.

"How long do you want to wait" before reducing the purchases? asks Paul Ashworth, chief U.S. economist of Capital Economics. He says the labor market's cumulative gains since the bond-buying began in September 2012 and recent momentum meet the Fed's standard of "substantial" improvement.

Ashworth adds that the risks of the bond-buying, such as eventual high inflation, are rising as the Fed continues to pump money into the economy.

Stuart Hoffman, chief economist of PNC Financial Services, generally agrees but says policymakers will wait until January to assess holiday retail sales and fourth-quarter economic growth. Like other economists, he thinks the Fed this week will signal that tapering is imminent by upgrading its economic outlook in its post-meeting statement.

But Barclays Capital economist Michael Gapen says the Fed will stand pat until March in part because much of the decline in unemployment has been due to Americans leaving the labor force, including some discouraged with job prospects. Also, about half of last quarter's economic growth was from business stockpiling that's likely temporary. And, he says, inflation remains well below the Fed's 2% target - the hallmark of a sluggish economy.

"It's better but not strong enough," Gapen says, noting that the Fed has repeatedly said it's seeking evidence that the economy's improvement will be sustained before tapering. He also thinks the Fed is unlikely to jolt financial markets that are expecting it to stay the course.

Still, "it's a fairly close call," Gapen says. "If they (taper) in December, I wouldn't be totally surprised."